Fund Strategies and Market Commentaries
As of April 9, 2014

During the recent market cycle, Midas Magic has concentrated in quality companies with growth and/or value characteristics in a focused portfolio, employing leverage.  Reflecting its long term investing outlook, the Fund’s average portfolio turnover has been approximately 9% over the last five years through 2013, which compares quite favorably to industry averages.  The Fund’s investment positioning has led to gratifying market outperformance in the 3 and 5 year periods, with significant recent contributions from tobacco company Lorillard, Inc. and financial services companies, such as Berkshire Hathaway Inc., Wells Fargo & Co. and JPMorgan Chase & Co., while the Fund’s holding of Cerner Corporation and Google Inc. underperformed.  The Fund’s portfolio companies typically enjoy global operations in cyclical and economically sensitive sectors such as financial services and technology. MasterCard Incorporated, Berkshire Hathaway Inc., JP Morgan Chase, Costco Wholesale Corporation, and Johnson & Johnson are among the top five portfolio holdings.  Currently, the overall portfolio compared with the S&P 500 profile has more potential earnings growth, less current dividend yield, but higher returns on assets and equity.

Midas Fund’s strategy in the year has been to leverage its portfolio of higher quality senior and intermediate producers of precious metals and other natural resources, including energy. The Fund previously eliminated much of its exposure to smaller and exploring companies lacking access to capital markets. We continue to believe our patient focus on quality may be rewarded in the long term, and we anticipate better returns should the valuations of mining companies come back in balance with strengthening metal prices. With a portfolio of what we consider to be generally strong companies at attractive valuations, we believe we can take a long term view to seek capital appreciation and, secondarily, current income. In the recent period, energy firms Cloud Peak Energy Inc. and Canadian Natural Resources Ltd contributed most to the Fund’s  performance.  Portfolio holdings of gold miners Kinross Gold Corporation and Eldorado Gold Corp fell most in the period with the sharp correction in the gold price.  The Fund is currently invested in a leveraged global portfolio of mining and energy companies with promising exploration potential, expanding production profiles, increasing cash flow, and/or other special growth features.

Midas Perpetual Portfolio’s investment objective is to preserve and increase the purchasing power value of its shares over the long term.  The Fund’s core asset allocation strategy is to invest a “Target Percentage” of its total assets in each of the following categories, consistent with tax planning and lower levels of portfolio turnover: gold, silver, Swiss franc assets, hard asset securities, and large capitalization growth stocks. Happily, the Fund has seen continuing recent strength in its holdings of shares of foreign banking and technology companies as part of its allocation to large capitalization growth stocks, offsetting to a large extent weakness in its silver allocation to a silver bullion ETF and mining company shares.  Earlier in the year, the Fund sought to implement its strategy to re-balance its portfolio to its targeted allocations and decreased its use of investment leverage, positioning the Fund more defensively, by reducing its allocations to gold, hard asset securities, and large capitalization growth stocks.



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